Nuveen Municipal OPPORTUNITY FUND Inc：New brands unlikely to help NIO break even

Investment Rating - The report maintains a HOLD rating for NIO Inc. with a target price reduced from US$5.60 to US$5.10, indicating a potential upside of 5.2% from the current price of US$4.85 [2][3]. Core Insights - NIO's 2Q24 earnings were mixed, with a quarter-over-quarter rise in gross profit offset by increased R&D and SG&A expenses, leading to a net loss of RMB5.1 billion [2]. - The company is projected to see significant sales volume growth in FY25/26, with estimates of 324,000 and 400,000 units respectively, driven by new brands Onvo and Firefly [2]. - Despite the anticipated sales growth, the report expresses skepticism about NIO's ability to achieve breakeven due to high ongoing expenses related to R&D and SG&A, particularly with the introduction of new brands [2]. Financial Summary - Revenue projections for FY24E are set at RMB66,730 million, with a year-over-year growth of 20.0%, and for FY25E at RMB89,501 million, reflecting a 34.1% increase [3][7]. - Gross margin is expected to improve from 5.5% in FY23A to 9.7% in FY24E and further to 11.1% in FY25E [3][7]. - The net profit forecast for FY24E is a loss of RMB18,693 million, improving to a loss of RMB16,734 million in FY25E [3][7]. Earnings Revision - The report revises FY24E revenue upwards by 7.6% and FY25E revenue by 12.1% compared to previous estimates [6]. - Gross profit estimates for FY24E and FY25E have been increased significantly, reflecting a 38.6% and 30.8% rise respectively [6]. - Operating and net profit forecasts remain negative, with operating losses projected at RMB19,909 million for FY24E and RMB17,991 million for FY25E [6]. Sales Volume and Margins - NIO's sales volume for 2Q24 was reported at 57,373 units, a 143.9% increase year-over-year, although the average selling price (ASP) decreased by 18.5% [6]. - The gross profit for 2Q24 was RMB1.689 billion, marking a significant year-over-year increase of 1842.0% [6]. - The report anticipates that even with a projected sales volume of 400,000 units annually, NIO may still struggle to achieve profitability due to high costs [2][6].